Accounting Information System, Effective Decision making process, Organizational Performance and Profitability
Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information systems. John Wiley & Sons.
Rainer, R. K., Cegielski, C. G., Splettstoesser-Hogeterp, I., & Sanchez-Rodriguez, C. (2013). Introduction to information systems. John Wiley & Sons.
Sousa, K., & Oz, E. (2014). Management information systems. Nelson Education.
Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Step 2
Introduction
Accounting Information Systems (AIS) can be considered to be an important tool which that can be incorporated into the field of Information and Technology systems. This can be designed to assist in the management as well as control of themes associated to economic-financial area of a particular organization. The magnificent progress in the field of technology has essentially accelerated the overall possibility of generating and utilizing accounting information from a tactical viewpoint (Du et al., 2015).
AIS comprising of associated elements put together can be used to acquire information, raw data otherwise ordinary data and alter them into financial data for reporting n to all the decision makers. This current segment presents an overview of the influence of accounting information system and overall performance of corporations and illustrates in detail the aims and objectives of the research, background of research, review of critical literature along with the timeline and the schedule (Diatmika et al., 2016).
Aims and objectives of the research
The objective of the present study is mainly to determine the overall influence of accounting information system on overall performance of organizations.
Critical Literature Review
Background of the study
Previous accounting literature presents arguments on strategic success that can be considered as a result of Accounting Information System. Several studies have evaluated the influence of AIS in strategic management, examined the attributes of AIS particularly under diverse strategic priorities (Laudon & Laudon, 2016). In addition to this, the accounting information system also aids in analysing the overall influence of AIS on performance of the specific interaction between specific categories of strategies as well as diverse designs of AIS.
Again, the specific design of AIS also supports different strategies of business in diverse ways that can increase the overall performance of the business. Prior academic literature also suggests the fact that growing investment on AIS can help in leveraging that in turn can help in achievement of a stronger, more flexible corporate culture in order to encounter persistent alterations in the environment (Uyar et al., 2017).
Again, innovation can be considered to be an incentive or else an encouragement with which a virtuous circle can be set up, directing towards better performance of the corporation and a reduction in the financial as well as organizational hindrances. Al-Hiyari et al., (2013) asserts that AIS are also referred to as systems that can be utilized for recording financial transactions of a corporation. As such, this system also helps in combining diverse methodologies, controls along with accounting mechanisms with the IT in a bid to keep a track of different financial transactions, deliver specific internal data as well as external data, financial, trend analysis capabilities to mark the performance of a corporation. However, the process of handling an organization as well as employing a particular internal control system that in turn can affect the accounting information system can be considered to be very crucial (Tazik & Mohamed, 2014).
Yet another significant factor in the field of accounting together with management decision making concerns with the fit with the AIS with the requirements of the organization for information communication as well as control. In addition to this, the AIS can also help in affecting the process of improving decision making process, overall quality of accounting information, performance analysis and facilitation of transactions of a corporation (Simkin et al., 2014).
Theoretical Studies
Contingency Theory, Agency Theory and Behavioural Theory
As rightly indicated by Patel (2015), contingency theory mentions that accounting information need to be designed in a very flexible way that in turn take into account environmental as well as organizational framework confronting a specific organization. Essentially, accounting information system also need to be adaptive to particular decisions, therefore, accounting information system need to be developed within a specific adaptive structure. Again, environmental uncertainty can necessarily be considered as a fundamental driver that can help in designing developing management accounting system in different organizations (Khalil & Zainuddin, 2015).
In addition to this, agency theory is also one of the most important theoretical hypotheses particularly in the field of accounting particularly during the last 20 years. However, the main feature of the agency theory is that this theory has made this attractive to diverse accounting researchers, also permits in incorporating different conflicts of interests, issues of incentives, mechanisms for controlling diverse incentive issues in models. It can be hereby deducted that agency theory can be utilized in the research to address different research questions that includes examination of different features of accounting system that affect incentive issues and evaluation of existence of incentive problems. As rightly indicated by Collier (2015), behavioural theory of accounting study helps in exploring bivariate association between characteristics of control system as well as diverse criterion variables.
However, the fundamental proposition of contingency theory is associated to the structure of the corporation, and control system design is associated to the context of the organization. Therefore, effects of control system characteristics are essentially moderated by diverse contextual factors that can influence individual as well as organization (Hui & Chang, 2016). Particular characteristics of certain control system need to be matched to different contextual variables that in turn can define environment of the organization.
Relationship between accounting information system and performance effectiveness of firms
Al-Hawari (2017) suggests that the primary reason for which accounting information is generated is mainly to enable the process of decision making. Nevertheless, for financial reporting to be effectiveness, amongst other necessities can be considered to be pertinent, complete as well as consistent. As such, these qualitative characteristics also call for the need of information that necessarily must not be unfair and it also need not have predisposition of favouring a specific party essentially over another party.
In essence, accounting information also need to provide decision makers the ability to predict the future activities. It also needs to increase the overall knowledge of all the users to recognize similarities as well as differences in two different categories of information (Patel, 2015). Thus, reliable accounting information can be illustrated as an essential pre-requisite for growth of the stock market. However, based on the growth of the economy and the potential of the stock market, different developed nations do not play with stock market as well as relevance of financial declarations.
A study carried out on exploration of the nature of relationship between automated system of information and effectiveness of organization reflected the fact that there exists a very strong association between particularly accounting information system as well as effectiveness of organization. This refers to the fact that access to information system can lead to effectiveness of organization. However, there are several studies that are available on accounting information value for valuation of equity, price of different shares and predictions of share. There might arise different issues regarding relevance of specific accounting numbers to different financiers (Khalil & Zainuddin, 2015). In essence, this aids diverse researchers to determine whether the outcome agrees or else disagrees from prior studies.
Profitability and decision making
As righty indicated by Demski (2013), the term profitability can be considered as the capability to generate profits increasingly over an extensive period of time. In particular, profits can itself present diverse significance to diverse people. However, the term profit has different views to different proprietor, bookkeepers, income Authority as well as economist. Again, profit every so often is considered as return that accrue to different stockholders. Nevertheless to common people, the term profit indicates towards revenue that necessarily goes to the financier.
In particular, to all accountant, profit denotes to earnings excess of revenue recognised from cost both from manufacturing as well as other operating expends. Nevertheless, for different practical resolutions profit is essentially business earning that is taken into consideration by an accountant. Collier (2015) mentions that profitability can be considered as the only convincing dimension of return from resources that is invested in the trade. However, it is enumerated in terms of share of the market that has been acquired for an agreed period. Thus, profitability can be enumerated based on return on sales or else profit margins that are utilized in business enterprises to make certain profit magnitudes on earnings.
Impact of Accounting Information on organizational performance and profitability
One of the vital conventions in decision making procedure and development economy is presence of quality as well as availability of information. As such, important information is generated from accounting information arrangements and from specific financial pronouncements. Essentially, qualitative as well as quantitative nature of accounting information comprises of steadiness, relevance, comprehensibility, comparability along with timeliness of process of decision making is openly related to different decision-makers as well as their consequences, finally it in turn can affect the overall profitability of the corporation (Patel, 2015).
However, this needs to be actual as valuable accounting information is obligatory to encounter the requirements of decision makers. In addition to this, accounting replicates a shared necessity that is accounting, succinct summary as well as declarations. However, under the same condition of accounting information, systems of accounting information, different layers of management control layer, this is necessarily more favourable to mirror the common accounting principles. Thus, it is necessarily high quality of accounting information, and this helps in verifying the enumeration of accounting components in the demonstration has definite breakthrough.
As rightly indicated by Simkin et al., (2014), the augmented significance of the portfolio management supposed by financial investigation of the novel missions have the inclination to relax its association to the particular accounting model. However, other chief developments of financial exercise along with theoretical and methodological research can revive and outspread this association in different directions. However, contrarily, operator elections as well as theoretical models associated to the financial structure, necessitate an examination of different liabilities, its advancement, emphasising the capital cost.
However, theoretical as well as practical improvements associated to funding, call for the need of the use of significant data on general accounting. In essence, these are advances of administrative finances, concentrating on new concerns, swing objectives as well as stakes financial evaluation steps in a certain direction that highlights information and uncover vast visions stakes associations between financial analysis as well as accounting (Patel, 2015).
Methodology
The primary aim of the current research intends to answer specific research questions and detect the relationship between Impact of Accounting Information Systems on Organizational Performance (Collier, 2015). The learner intends to carry out a secondary analysis by utilizing existing data. This data are essentially acquired for particularly a prior study that is for the purpose of pursuing a specific research interest that is completely different from that of the original piece of work. However, this might possibly be due to the new research questions that are posted for this study.
References
Adenike, A. T., & Michael, A. A. (2016). Effect of Accounting Information System Adoption on Accounting Activities in Manufacturing Industries in Nigeria.
Al-Hawari, F. (2017). Analysis and Design of an Accounting Information System. International Research Journal of Electronics and Computer Engineering (ISSN Online: 2412-4370), 3(2), 16-21.
Al-Hiyari, A., AL-Mashre, M. H. H., & Mat, N. K. N. (2013). Factors that affect accounting information system implementation and accounting information quality: A survey in University Utara Malaysia. American Journal of Economics, 3(1), 27-31.
Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.
Demski, J. (2013). Managerial uses of accounting information. Springer Science & Business Media.
Diatmika, I. W. B., Irianto, G., & Baridwan, Z. (2016). Determinants of Behavior Intention Of Accounting Information Systems Based Information Technology Acceptance. Imperial Journal of Interdisciplinary Research, 2(8).
Du, K., Huddart, S., & Xue, L. (2015). Accounting Information Systems and Asset Prices.
Hui, Q., & Chang, S. (2016, March). Accounting Safety System in E-Commerce and Its Application. In Measuring Technology and Mechatronics Automation (ICMTMA), 2016 Eighth International Conference on (pp. 63-66). IEEE.
Khalil, M. A., & Zainuddin, Y. (2015). Intrinsic Motivation as a Mediator on Accounting Information System Adoption. Pertanika Journal of Social Sciences & Humanities, 23.
Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.
Patel, S. (2015). Effects of accounting information system on Organizational Profitability. International Journal of Research and Analytical Reviews, 2(1), 72-76.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information systems. John Wiley & Sons.
Tazik, H., & Mohamed, Z. M. (2014, February). Accounting information system effectiveness, foreign ownership and timeliness of corporate financial report. In 5th Asia-Pacific Business Research Conference (pp. 17-18).
Uyar, A., Gungormus, A. H., & Kuzey, C. (2017). Impact of the Accounting Information System on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian Accounting Business & Finance Journal, 11(1), 9.
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